On June 25, 2018, the United States Supreme Court ruled in favor of Cravath client American Express Company (“AmEx”) in Ohio, et al. v. American Express Co., et al., one of the most significant government antitrust enforcement actions in history.

In a 5-4 decision, the Supreme Court affirmed the September 2016 judgment of the U.S. Court of Appeals for the Second Circuit, holding that “Amex’s business model has spurred robust interbrand competition and has increased the quality and quantity of credit‑card transactions.”

The ruling defines how antitrust law will be applied to two‑sided markets, which are increasingly prevalent in today’s business environment, and confirms a momentous victory following the long road Cravath traveled with AmEx in defense of its business model. For more than a decade, AmEx refused to settle and trusted Cravath with the bet‑the‑company case, beginning with a government investigation and culminating in the decision to hand partner Evan Chesler the reins before the Supreme Court.

Supreme Court Justice Clarence Thomas delivered the Opinion of the Court for the majority, concluding that AmEx’s anti‑steering provisions, which contractually prohibit merchants from discouraging customers from using an AmEx card at the point of sale, do not have anti‑competitive effects or unreasonably restrain trade. The Court noted that “[t]o the contrary, while these agreements have been in place, the credit‑card market experienced expanding output and improved quality.”

The case was originally filed in 2010 by the U.S. Department of Justice (“DOJ”) and 17 state attorneys general challenging certain provisions of AmEx’s merchant agreements. While MasterCard and Visa, AmEx’s co‑defendants in the case, settled shortly after the government filed suit, Cravath took AmEx’s case to trial and argued the company’s appeal before the Second Circuit. Although the trial court ruled adversely, a panel of the Second Circuit unanimously reversed the decision and directed judgment in favor of AmEx in September 2016. The appellate decision recognized for the first time the fundamental importance of examining two-sided markets in the context of vertical restraints, vindicating a company’s ability to protect its products and brand experience through contract. The DOJ, which led the investigation, trial and appeal for plaintiffs, decided not to petition for certiorari—a decision joined by six of the 17 states. The 11 remaining states filed a cert petition, and the Supreme Court heard arguments on February 26, 2018.

The Cravath team included partners Evan R. Chesler, who argued on behalf of AmEx before the Supreme Court, Peter T. Barbur, Kevin J. Orsini and Rory A. Leraris; now‑retired partner Stuart W. Gold; senior attorneys Joanne M. Gentile and Jesse M. Weiss; and associates Justine V. Beyda, Megan Y. Lew, Kate F. Stamell, Kyle S. Gazis, Jacqueline D. Harrington, Lauren Roberta Kennedy, R. Maxwell Tanner, David H. Korn, Peter H. Fountain, Molly M. Jamison, Alyssa M. Pompei, Andrew D. Huynh, Lelia A. Ledain, Garrett M. Biedermann and Nicholas C. Suellentrop. Daniella L. Esses also worked on this matter.

The case is Ohio, et al. v. American Express Company, et al., No. 16-1454 (U.S. Sup. Ct.).